When comparing the economic development of resource-poor and resource-rich countries, it seems quite surprising that the majority of resource-abundant countries perform worse than resource-poor countries. A large amount of academic research has been conducted on this unusual phenomenon and it was given the name ‘Resource Curse’. The theory states that there is an inverse relationship between a country’s natural resource endowment and its economic development.
In this study, two countries that have, according to the general academic consensus, despite their resource-abundance had a prosperous economic development and thus supposedly managed their natural resources well.
The United Arab Emirates (UAE) and Norway are often cited examples of how to avoid or escape the natural resource curse. But the question is what their key management strategies are and whether those can be transferred to and implemented in other resource-abundant countries that suffer from the Resource Curse?
In order to find answers to these questions, after analyzing the UAE and Norway, both countries will be compared to Nigeria, known to have a lot of difficulties with its natural resource wealth and consequently struggles economically.
The overall purpose is to check different ways of dealing with natural resources efficiently and examine whether Nigeria could possibly escape the Resource Curse by adopting some of these strategies used by Norway or the UAE.
Table of Contents
1. Introduction
2. Methodology
3. Literature Review
3.1. Resource Curse
3.2. How to escape/avoid the resource curse?
4. The United Arab Emirates
4.1. Economic development
4.1.1. Macro economy
4.1.2. Macroeconomic policies
4.1.3. Other instruments of the Government
4.2. Social development
5. Norway
5.1.1. Macro economy
5.1.2. Government Pension Fund Global
6. Nigeria
6.1. Development
6.2. Feasibility study for Nigeria
7. Bibliography
Research Objectives and Core Themes
The primary objective of this research is to analyze the effectiveness of natural resource management strategies in the United Arab Emirates and Norway to determine their potential transferability to Nigeria, a country currently struggling with the economic implications of its significant natural resource wealth.
- Theoretical framework of the 'Resource Curse' and its economic symptoms.
- Comparative analysis of resource management in the UAE and Norway.
- Assessment of Nigeria's economic and social development challenges.
- Evaluation of policy transferability for sustainable natural resource exploitation.
Excerpt from the Book
3.1. Resource Curse
The term Resource Curse proposes that a natural resource abundant country is economically worse off than a country without high natural resource endowments. This research project concentrates on the natural resources of oil and gas, since these resources are of crucial importance for the whole world economy. Furthermore, due to a restricted time frame the scope of this research project needed to be limited. There are several economic symptoms and explanations about the Resource Curse's emergence, causes and effects on a country:
CURRENCY APPRECIATION: When a country is blessed with natural resources like oil or gas, it is likely that these products are exported and then the current account surplus implies a huge inflow of foreign currency, which consequently, causes an appreciation of the domestic currency. As a result, other sectors of the economy suffer from reduced profitability and shrunk productive basis of the economy. This phenomenon is also often described as the Dutch Disease. In the 1960s, the Netherlands discovered large natural gas deposits in the North Sea. In the subsequent years, due to increased exports of the natural resource, the inflow of foreign currency grew and thus, the Dutch currency appreciated. Consequently, other sectors of the economy (unrelated to gas) lost their competitiveness in the international markets and profitability stagnated.
VOLATILITY: Resource abundant countries lack the opportunity to influence resource prices on the world market and consequently from fluctuating commodity prices and the quantity of oil money coming in, as well as the timing of the earnings.
Summary of Chapters
1. Introduction: Introduces the 'Resource Curse' phenomenon and sets the research goal of comparing UAE and Norway's strategies to aid Nigeria.
2. Methodology: Describes the qualitative and quantitative approach used to examine country cases and assess the transferability of policies.
3. Literature Review: Details the economic symptoms of the resource curse, such as currency appreciation and volatility.
4. The United Arab Emirates: Examines the UAE’s economic and social development and its success in diversifying beyond the oil sector.
5. Norway: Analyzes Norway’s 'role model' approach, focusing on its sovereign wealth fund and stable institutions.
6. Nigeria: Investigates Nigeria's specific socio-economic context and evaluates the feasibility of adopting strategies from the UAE and Norway.
7. Bibliography: Lists the academic and statistical sources utilized throughout the research paper.
Key Terms
Resource Curse, Dutch Disease, Natural Resource Management, Sovereign Wealth Fund, Nigeria, UAE, Norway, Macroeconomy, Fiscal Policy, Economic Diversification, Commodity Volatility, GDP, Currency Appreciation, Institutional Strength, Social Development
Frequently Asked Questions
What is the core focus of this research?
The research explores the 'Resource Curse' theory and evaluates how resource-rich countries like the UAE and Norway have successfully managed their wealth, contrasting this with Nigeria's ongoing economic struggles.
Which countries are analyzed as benchmarks?
The study uses the United Arab Emirates (UAE) and Norway as primary case studies for successful natural resource management strategies.
What is the ultimate research question?
The paper seeks to answer whether the management strategies employed by the UAE and Norway can be successfully transferred to Nigeria to help it escape the negative effects of the resource curse.
What methodology is applied in this paper?
The researchers use a qualitative approach combined with quantitative statistical data from the World Bank and other national sources to provide valid and reliable arguments.
What topics are covered in the main section?
The main sections cover literature reviews on the resource curse, detailed economic and social development analyses of the three target countries, and a final feasibility study regarding policy transfer.
Which keywords define this work?
Essential keywords include Resource Curse, Dutch Disease, Sovereign Wealth Fund, Economic Diversification, and sustainable development.
Why is Nigeria’s situation different from Norway’s?
The study highlights that Norway had highly developed institutions before discovering oil, whereas Nigeria faces challenges related to infrastructure, political instability, and internal ethnic/religious diversity.
What role do Sovereign Wealth Funds play in this context?
They are described as critical tools to invest excess oil revenues, balance global market volatility, and ensure that wealth is preserved for future generations rather than being consumed immediately.
- Quote paper
- Ramona Blietz (Author), 2014, Feasibility Study of Natural Resource Management Strategies for Nigeria based on Selected Country Cases of the United Arab Emirates and Norway, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/319843
